How Brooklyn Quietly Became New York's New Startup Hub

In the late 1990s, people called New York’s cluster of internet startups Silicon Alley. By 2012, by some estimates, half or more of New York’s startup community lived in Brooklyn. Companies followed their people.

Rob Kalin started Etsy in his Fort Greene apartment in 2005. He built it in Dumbo. In 2015, Etsy went public. It was the largest VC-backed IPO from New York at that time. A Brooklyn company had set the bar for the city.

The plan

In 2004, the city rezoned Downtown Brooklyn for corporate offices. Developers built housing instead. By 2014, only about 300,000 of 4.5 million planned square feet of commercial space existed.

The office district did not arrive. The startups grew in other parts of the borough.

Dumbo

Developer David Walentas and Two Trees bought much of Dumbo’s industrial property in the late 20th century. Galleries moved in first. Startups came next.

Dumbo offered large open floors, low rent and nearby talent. Landlords gave short leases, flexible credit terms and fast deals. Young companies cannot plan their headcount a year out. Flexible space let them stay and grow.

By the mid-2010s, rent in Dumbo was no longer cheap. Investor Charlie O’Donnell noted that companies came anyway. They came to be near each other. That is when a cluster becomes a hub.

Hardware

Brooklyn builds physical products.

NYC Resistor, a hacker space in Boerum Hill, produced MakerBot, the desktop 3D printer company. In 2013, Stratasys bought MakerBot for over $400 million in stock. A Brooklyn hardware startup had a major exit.

Hardware teams need workshops, machines and room to prototype. Newlab co-founder David Belt saw that New York had support for software founders and little for hardware teams. In 2016, Newlab opened in Building 128 of the Brooklyn Navy Yard, a former shipbuilding site. Startups there build robots, sensors and new materials.

Brooklyn’s industrial buildings became its advantage.

Public land

The city owns the Navy Yard and the Brooklyn Army Terminal. Its investment in these industrial sites drove much of the waterfront’s growth. A public owner can choose tenants for the jobs they create. It can fund long renovations. Newlab came out of a partnership between its developer, the Navy Yard, the state and the city.

In 2019, Dock 72 opened at the Navy Yard. It was the first major new office building in Brooklyn in more than a decade. Food52 moved its offices there.

People

Each step had a person behind it.

In 2009, NYU’s engineering school and the city’s Economic Development Corporation opened their first startup incubator. NYU then opened one in Dumbo. In 2012, O’Donnell launched Brooklyn Bridge Ventures, the first venture fund based in the borough. He said he worried investors would not take an office on the Brooklyn side of the bridge seriously. He raised the fund.

In 2013, the Downtown Brooklyn Partnership, the Navy Yard and the Dumbo Improvement District formed the Brooklyn Tech Triangle. It drew firms from Europe and the West Coast.

Buyers followed. Spotify bought Gimlet Media, a Downtown Brooklyn podcast company, for $230 million. Uber bought Jump, a Navy Yard bike-share startup, for $200 million.

Spread

As the Triangle filled, companies moved to Williamsburg and Sunset Park. Kickstarter made a landmarked pencil factory in Greenpoint its headquarters. In 2013, Jamestown and Belvedere Capital began a $1 billion renewal of Industry City to combine tech with modern manufacturing.

Costs

Critics say the 2004 rezoning had no affordable housing rules and displaced small businesses. In Sunset Park, the community group UPROSE opposed Industry City’s expansion to protect one of the city’s last working industrial waterfronts. Startups and manufacturers compete for the same buildings.

Today

After the pandemic, most office tenants at Industry City returned to their space. People will work in an office near home.

Seedtable counts 256 Brooklyn-based startups that have raised $12.0 billion, with 23 raising more than $100 million. Much of the activity is in machine learning and software: Reflection AI, Inspiren, Fundraise Up. Teamshares, a Brooklyn fintech startup, builds on the idea that employee ownership is the future of small business.

Newlab’s Brooklyn hub has hosted nearly 500 startups that raised more than $4 billion together. Newlab runs projects with large corporations and governments. That puts its startups in front of the organizations that will use their technology. Technology creates value only when an industry adopts it, and this is how adoption starts.

Brooklyn Bridge Ventures still invests only in NYC-based companies.

The city planned a corporate downtown. Founders built a startup hub in the neighborhoods where they lived.